MARA Holdings, Inc.

Good day, ladies and gentlemen. Welcome to Marathon Digital Holdings' fourth quarter and fiscal year 2023 earnings webcast and conference call. I'd now like to turn the call over to your host, Charlie Schumacher, Vice President of Corporate Communications. Please go ahead, Charlie.

Thank you, Kevin. Good afternoon, and welcome to Marathon Digital Holdings' fourth quarter and fiscal year 2023 earnings call. Thank you for joining us for our call today. With me on today's call are Chairman and Chief Executive Officer Fred Thiel and our Chief Financial Officer Salman Khan. Before we get started, I'd like to remind everyone that our prepared remarks may contain forward-looking statements and that we may make additional forward-looking statements during the question and answer session. These forward-looking statements are subject to risks and uncertainties and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Marathon Digital Holdings are, as such, a forward-looking statement. Please refer to our earnings release for a full recitation of our forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those anticipated by Marathon at this time. Some of these risks and uncertainties are more fully described in Marathon's public filings, with U.S. Securities and Exchange Commission, which can be viewed at www.sec.gov and ir.mara.com. Finally, please note that on today's call, we will refer to certain financial measures that were not prepared in accordance with generally accepted accounting principles in the United States, including adjusted EBITDA and non-GAAP total margin. Marathon believes these non-GAAP financial measures are important indicators of its operating performance because they exclude certain items that are unrelated to and may not be indicative of its GAAP financial results. Please refer to our company's periodic reports on Form 10-K and 10-Q and to our website for a full reconciliation of these non-GAAP performance measures to the most comparable GAAP financial measures. We'll begin today's call with prepared remarks from Fred and Salman. After their comments, we will be going through some of the more popular questions from our investors before transferring to a live Q&A with our covering analysts. And with that out of the way, I'm going to turn the call over to Fred to kick things off.

Fred? Thank you, Charlie. We had two primary objectives for 2023, which we outlined on our first quarter earnings call last year. The first was to energize our previously purchased mining rigs to reach our target of 23x hash. And the second was to optimize our performance to become more effective and more efficient. As the record operational financial results we published today clearly demonstrate, 2023 was an immensely successful year for Marathon, in which we achieved both of our primary objectives. Today, Marathon is one of the largest Bitcoin miners in North America, and whether it be financially, operationally, or technologically, we believe we are setting the pace for this industry. In 2023, we grew our hash rate 253% from 7x a hash to 24.7x a hash, surpassing our target of 23x a hash. At the end of last calendar year, we had over 210,000 Bitcoin miners operating across 11 different sites on three continents, which we believe makes us the largest and most diversified publicly traded miner today. At the same time, we became much more efficient at converting energy into economic value, which is the heart of what we do. During the year, we improved our fleet's efficiency 21% from 30.9 joules per terahash to 24.5 joules per terahash, which means that on top of our scale and our diversified operations, we have one of the most efficient fleets in the industry. Our operations team dedicated significant efforts to enhance the performance of our facilities. In August of 2023, our site in King Mountain only operated at an average of 51% of its operational capacity, and the site in Granbury only averaged 56% of its total capacity. Our team took charge of the situation, flying in to assess and address the issues, and by the end of 2023, our team had optimized both sites such that King Mountain operated an average of 92% of its capacity and Granbury at an average of 99% of its capacity in December. While site performance will fluctuate with seasonality and maintenance, The significant improvements we made underscore the positive impact that our team and our processes can have in our operation. A testament that we are not just effective capital allocators, but excellent operators as well. Our operational expertise is one of the many reasons we are confident that we will be able to successfully integrate and ultimately optimize the two data centers we recently acquired from Generate Capital and any other sites we may acquire in the near or distant future. In 2023, the total Bitcoin network's hash rate experienced a significant increase, doubling from 253 exahash to 509 exahash. This increase in hash rate had the equivalent impact of a halving event. With hash rate doubling, difficulty essentially doubled, and that effectively reduced the reward for mining a block by half, holding all else constant. Meanwhile, Marathon grew more than twice as fast as the rest of the network as we increased our hash rate 253% last year. At the same time, we improved our operational efficiency, improving our fleet efficiency 21%. As a result, we produced a record amount of Bitcoin in 2023. We increased our Bitcoin production 210% year over year from 4,144 Bitcoin in 2022 to 12,852 Bitcoin in 2023. Production improved throughout the year, but the fourth quarter really stood out operationally and financially. By the end of the fourth quarter of 2023, we were operating near full strength after Garden City was fully energized in October, following several months of regulatory delays. In December, we averaged 90% capacity across all sites, and at the same time, we benefited from a huge surge in transaction fees on the Bitcoin network. In December 2023 alone, we produced 1,853 Bitcoin with 380 Bitcoin or 22% of our total production coming from fees. As a result, we produced a record 4,242 Bitcoin in Q4. In Q4 2023 alone, we produced more Bitcoin than we did in all of 2022 and more Bitcoin than three of our top competitors combined. In addition to Q4's record Bitcoin production, we announced several new expansions at the end of last year that are indicative of how we see Marathon evolving. The first announcement was our inaugural pilot project powered by renewable off-grid energy from a landfill in Utah. Our team is still working on finalizing the data, but the preliminary results of this project demonstrate that Bitcoin miners can actually help reduce emissions. The data suggests that the model we helped pioneer of turning trash into cash by mining Bitcoin with stranded methane from landfills is economically viable for miners. For the landfill operator, it is more effective at reducing methane emissions than flaring. Following the landfill gas project in Utah, we also announced our second international expansion and our first deployment into Latin America. In Paraguay, we're working to convert 27 megawatts of unused hydropower into 1.1 exahash of Bitcoin mining capacity. By Marathon standards, this deployment is really just a large-scale pilot, and it serves as an excellent case study for the value that Bitcoin mining can bring to regions throughout the world with excess power. It also demonstrates our ability to replicate the joint venture model that we developed in Abu Dhabi, which allows us to partner with regional experts to quickly and effectively expand our diversified portfolio of Bitcoin mining assets. This experience is essential as we look to grow our footprint internationally and educate the world on the value that Bitcoin mining can bring as a technology solution to the energy sector. Perhaps the most significant announcement from last quarter was our $179 million acquisition of our first fully owned data centers in Kearney, Nebraska and Granbury, Texas. The acquisition closed last month, and the purchase price was subject to customary closing adjustments. With this acquisition, Marathon transformed from a company with 584 megawatts of capacity, 3% of which we directly owned or operated, to one with 910 megawatts of capacity, 45% of which powers sites we directly own. We've already spoken about the strategic importance of owning these sites. of the creative nature of this transaction, and of the opportunities we have to reduce our operational costs at these sites. So I'll refrain from going into detail today. We will be assuming full operation control of them by April 30th or earlier, allowing us to accelerate operational cost savings and optimization. While we're not yet the operators, our team is currently intently focused on engaging the local communities to ensure that we can be the best neighbors possible as we go through the transition process. We believe Bitcoin mining can positively change the world, and that starts with the local communities in which we operate, where our operations create highly skilled jobs and economic contributions for the people of those communities. Before going too far into our future plans, I'm going to turn the call over to Salman to discuss our financial results for the fourth quarter and fiscal year ended 2023.